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Neha Pandey Deoras / Mumbai March 09, 2012,  Business Standard

Nagpur-based lecturer Bhagyashree Khote was more than happy to receive her Aadhaar number. She had lost her Permanent Account Number (PAN card) some time before and had to make an investment at the earliest to avail of deductions under Section 80C.

However, Khote was asked to produce additional documents like driving licence or passport if she wanted to invest more than Rs 5,000. Unfortunately, she had neither. “When I had enquired over the phone, the mutual fund advisor had agreed to accept Aadhaar. But, later he backed out,” she narrates.

The Securities and Exchange Board of India (Sebi) allows investing in mutual funds without a PAN but only up to Rs 50,000 per year through the Systematic Investment Plan (SIP) route. Investments per month should be less than Rs 5,000.

When contacted, two mutual fund advisors and stock brokers said they accept the Aadhaar card only as a photo identity document. “Irrespective of the amount, we ask for another address proof and birth proof to be sure about the customer, as fund houses demand it and Sebi is also very stringent these days,” said a Mumbai-based mutual fund advisor.

Khote is not an isolated case. Former member of the Central Board of Excise and Customs (CBEC) Sukumar Mukhopadhyay told Business Standard, “The card is a proof of identity and not of citizenship. It has only my year of birth. Thus, it will not serve as proof of my birth date, which could have easily been added, since I had mentioned it in the enrolment form. So, for this purpose, I would have to continue relying on my passport.”

Aadhaar is a 12-digit identification number issued by the Unique Identification Authority of India (UIDAI) on behalf of the Government of India. It displays an individual’s full name, gender, year of birth, photograph and full address.

The card states that it will help avail government and non-government services. But, this will require each organisation to separately notify that it accepts Aadhar, say experts. It is not clear if banks will accept the card for opening accounts. An official from a private sector bank says, “Not all banking services can be provided on the basis of Aadhaar though RBI has agreed to it. As of now, we are allowing only no-frills services on it and that, too, to those who cannot provide any other valid document.” Agrees a foreign banker, adding more clarity is required.

It gets worse when you approach an insurance company, as the card doesn’t mention your date of birth. “The card can help us determine your approximate age but it poses a loss for us if you are on the higher side of an age block. For instance, say, you were born in 1982, which means you should turn 30 this year. But how do I determine if you have turned 30 or not. Pricing such policies becomes difficult,” says the chief executive of a private life insurance company. Hence, they prefer PAN. But, if you are shopping for a smaller cover (Rs 1 lakh and less), you may find takers for Aadhaar.

Aadhaar cannot be an alternative to PAN. It does not serve any extra purpose and those who have a PAN card can do without it.

R S Sharma, director general of UIDAI, says Aadhaar has little relevance for individuals who have all essential documents like PAN. It is primarily for those who do not have any of the important documents. However, if you’ve been transferred to a new city, you will find it easy to get LPG and telephone connections using Aadhaar.